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How Are Interest Rates Determined?

More than 2 out of 3 of us are directly affected by mortgage interest rates. We own our homes and we owe mortgages on our homes. Those of us who rent are affected as well, because we are renting someone else’s home and their mortgage rate may impact our rent. And then, many of us may want to purchase a home or we may choose to refinance or get an equity line on our home.

Who Sets the Rates?
The process goes like this:

  • Investors sell mortgage commitments on the New York Stock Exchange in the ‘bond market’